How Streamlining Your Annual Planning Process Can Free Up Resources to Drive Organizational Goals

March 8, 2019

For the last 10 years, I’ve consulted many healthcare organizations on process improvement and change management in their operations and finance. One of the most common barriers I’ve seen limiting their capacity to support organizational objectives is the annual budgeting process, tying up too many resources. Although creating an annual plan—though maybe not a budget—will always be necessary, streamlining the process and leveraging automation can free up resources to focus on managing performance. To get the most out of your financial planning process, you will need to leverage plays in 3 targeted areas: efficiency, agility and performance management.

Driving Planning Efficiency

Driving efficiency means putting in front-end work for better budgeting and planning. To create efficiency, you can run this play.

Ensure Planning is Collaborative Process with Input from Key Organizational Leaders and Experts

Because financial planning is a manual and often unstandardized process, you need to get all teams and stakeholders aligned. First, define and communicate roles and responsibilities. Getting clarity on stakeholder involvement means less time spent away from core functions and critical projects. Next, define a clear process—what, where, when, and how. Outline a clear workflow around budget development to avoid rework. Then automate input data when possible to reduce effort and manual errors, such as using volumes to drive variable expenses, productivity standards to drive labor, integrated reimbursement model and cost data to generate activity-based budgeting.

Clearly defined roles, responsibilities, and methods for even non-Finance stakeholders will result in more time for executing an accurate plan. With a reduction of manual updates and offline modeling, Finance and Operational teams can focus more time on analyzing and improving performance. This will also lead to increased buy-in from leadership and a more accurate plan. Leaders at Alina Health (MN), CentraCare Health (MN), Mission Health (NC), Wake Forest Baptist Health (NC) and Riverside Health System (VA) have all effectively utilized this play in their organizations.

Increasing Planning Agility

CFOs affirm that traditional budgets are often out of date or inaccurate shortly after they are complete. Market conditions change so rapidly that planning annually isn’t enough. By adopting a rolling forecast, healthcare organizations enable iterative reviews and more realistic discussions of financial performance. To drive that process, utilize the following play.

Adopt A Rolling Forecast

Adopt a rolling forecast in place of or to complement the detailed budget. Define a process and cadence for populating and reviewing an entity-level forecast mode. Be sure to engage Operations, Strategy and Service Line leaders. Ensure clarity regarding inputs and validation steps to reconcile conflicting data.

With the opportunity to adjust plan targets and resource allocation, you can quickly react to shifting dynamics and new initiatives. Cross-functional stakeholder inputs create a plan that’s been vetted by all angles of the organization, meeting objectives and priorities across teams. Leaders at Park Nicollet Health Partners (MN), John Muir Health (CA), OSF Healthcare (IL), New Hanover Regional Medical Center (NC) and Baptist Health (AR) have all effectively utilized this play in their organizations.

Improving Performance Management

Most organizations lack visibility and/or accountability to financial performance outside of the Finance team. Designing and implementing an operating review cadence creates the framework to increase financial stewardship across your organization. To establish this process, utilize the the following play.

Implement an Operating Review Cadence

First, implement an Operating Review cadence. Define the specific metrics, tools, and processes to ensure end users and leadership are held accountable for performance within their respective scope. Be sure to integrate financial details to improve analysis. Make all detailed data available in one place for end users to research sources of variation. Deploy cascading scorecards. Ensure there is alignment between the metrics and KPIs reported at the executive level of the organization to the frontline nurse manager.

Providing visibility into financial performance at all levels can help you better identify and diagnose performance trends. Enabling an accountability structure for controllable metrics inspires even managers challenged to develop financial acumen to take ownership for performance within their scope. If you can provide stakeholders with a forum for variance discussion, you’ll remove barriers to variance reporting and output quality. Leaders at Children’s Medical Center Dallas (TX) have effectively utilized this play in their organization.

Achieving organizational goals requires investment of resources, money, and time. To ensure your Finance team continues to manage targets, reduce time spent creating the financial plan and managing its performance. Further, it is critical that accountability to financial targets is moved outside of Finance. Operational leaders, from COO to nurse managers, share control over financial performance.  Enabling and executing a consistent performance management process will enable non-Finance leaders to explain and resolve variances more efficiently and effectively.

Providing more structure, automation and accountability to your annual budgeting process will drive a more efficient, agile process for your entire organization, freeing up resources to fulfill larger goals.